How HMRC's pension checking policy landed savers in hot water

PaperworkChanges to the way HM Revenue & Customs (HMRC) registers pension schemes have been hailed as a blow to pension liberation scammers but that conveniently skips over badly the system operated before.

The biggest change HMRC is making is that it will abandon the 'process now, check later' policy that it had adopted when registering pension schemes for tax relief.

This meant any Tom, Dick, Harry and pensions liberator – who was keen to defraud people by transferring their pension funds in exchange for early access and whopping great tax bill – could set up a scheme. And they did.

Pensions minister Steve Webb says £420 million has already been transferred and the pensions liberation taskforce, Project Bloom, has suspected £185 million transfers in its sights.

Correct me if I'm wrong, but shouldn't HMRC have reviewed its 'blind eye now, frantic chasing of rogues after, too-little-too-late' policy a bit earlier – maybe when pension liberation seriously started to show on its radar a few years ago?

Don't get me wrong, HMRC, the government, the regulators and the Serious Fraud Office have been true to their word that they were going to clampdown on pension liberation and have shut down 500 schemes.

I just can't help but wonder would they have had to go to the trouble of setting up a taskforce, the 'Don't let your pension become prey' advertising campaign, and costly police raids, if the rules had just been a bit more sensible in the first place.

This is people's life savings we're talking about, a pension is typically the largest asset a person has after their house, and the taxman was letting the cash be transferred into schemes run by goodness-knows-who, outside of the rules and to extremely poor ethical standards.

Of course there has to be an element of 'buyer beware' and many people know the risks of pension liberation and go for it anyway because they need cash, but for those that are genuinely duped (and there are many) there needs to be some safeguards in check to ensure that their money isn't falling into the hands of some rogue who won't give a second thought about leaving the consumer penniless in retirement.

Good on the taxman for doing something productive and stopping these unscrupulous chancers but can it take note for the future that more sensible rules would ensure that action it takes isn't too little, too late.